Crop advisory body — The Commission for Agricultural Costs and Prices (CACP) — has recommended that the Government revise the price of ethanol derived from sugarcane based feedstocks in view of the increase in fair and remunerative price (FRP) of sugarcane. The Commission also suggested exploring the feasibility of dual pricing mechanism for sugar for domestic and commercial users, while recommending setting up a high powered expert committee to review issues relating to cane area and revenue sharing formula among others.
On Tuesday, the Union Cabinet approved an increase of ₹10 per quintal in the fair and remunerative price (FRP) of ₹365 per quintal for the 2026-27 season, based on the recommendations of CACP.
In its non-price recommendations, CACP observed that the administered price mechanism for ethanol produced from sugarcane-based feedstock and guaranteed procurement by the public sector Oil Marketing Companies (OMCs) under the Ethanol Blended Petrol (EBP) Programme have helped in stabilizing Indian sugar sector and ensured timely cane payment to farmers.
“However, there has been a marginal increase in prices of ethanol produced from sugarcane juice/sugar/sugar syrup and B-Heavy molasses during last five years compared with increase in FRP of sugarcane and price of grain-based ethanol. The Commission, therefore, recommends that the Government should revise the price of ethanol from sugarcane-based feedstocks in view of increase in FRP of sugarcane,” it said.
The recommendations assumes significance as the industry has been demanding upward revision in prices of ethanol.
Further, the Commission has also recommended that feasibility of a dual pricing mechanism of sugar for domestic and commercial users should be explored as industrial/commercial sector uses about 60-65 percent of total sugar production in the country. Various state governments, sugar industry and industry associations have also suggested dual price policy for sugar, it said.
CACP observed that the Indian sugar industry has undergone significant transformation by diversifying into ethanol and substantial capacity addition and expansion during the last decade.
“Rapid expansion in capacity not accompanied by growth in cane availability and market demand for sugar has contributed to lower capacity utilization and closure of over 30 percent of sugar factories in 2024-25 season,” it said. Further it recommended that a High-Powered Expert Committee comprising key stakeholders, including Central and State Government, sugar industry, academia, and farmers, should be constituted to review issues related to cane area reservation, minimum distance criteria, revenue sharing formula, dual pricing, etc.
It also recommended that the cane area reservation and minimum distance criteria should be reviewed to avoid unhealthy competition amongst sugar factories and ensure adequate supply of sugarcane for running sugar factories. Cane area reservation and minimum distance criteria are intended to ensure adequate cane supply to mills, prevent unhealthy competition, and ensure the sugar mill procures sugarcane from farmers at FRP/SAP. However, sugar industry has witnessed capacity addition and expansion of existing factories over the last two decades and resulted in low capacity utilization and closure of 240 factories in 2024-25 season, it observed.
Published on May 6, 2026